Iowa agency approves $3.7M in incentives for Sub-Zero kitchen appliance factory in Cedar Rapids

A state agency has approved $3.7 million in incentives for a high-end kitchen appliance manufacturer planning to expand into Cedar Rapids.

Sub-Zero Group aims to build a 400,000-square-foot factory in the eastern Iowa city beginning in late summer or early fall 2023, according to the Iowa Economic Development Authority. In exchange for a share of public money for the project, the private, Madison, Wisconsin-based company promises to hire 192 workers, paying 127 of those employees at least $24.20 an hour.

The IEDA board voted earlier in June to approve the incentives, with about $2.6 million in tax credits and a $1.1 million loan that the state will forgive if Sub-Zero fulfills its promises within seven years. In addition to providing jobs, Sub-Zero will need to spend $140.6 million on the project, which includes buying the land, buying machines and building the factory.

In addition to Sub-Zero refrigerators, the company makes Wolf cooking appliances and Cove dishwashers at factories in Fitchburg, Wisconsin, and Goodyear, Arizona. Some of its products, like super-sized refrigerators with glass doors and ranges with infrared char-broilers, retail for $20,000 or more.

“We’re really pleased that they’ve made the decision that they’re going to locate their next factory in Cedar Rapids," IEDA board member Mark Kittrell said Friday.

More:Iowa Premium cancels Tama beef processing factory that was slated to add 400 jobs

On top of state money, the city of Cedar Rapids will discount the company's annual property tax bill by about 75% for 20 years. The IEDA estimates that will save Sub-Zero $30.7 million.

According to KHAK radio, the Cedar Rapids City Council approved the local incentives Tuesday, though its still needs to sign off on a final development agreement. The Cedar Rapids Gazette reported that the factory will sit off Interstate 380, about 1-1/2 miles east of Eastern Iowa Airport.

Cedar Rapids Metro Economic Alliance Executive Director Doug Neumann said in a news release that Sub-Zero executives reached out to the development group in December because the company wants to make more appliances.

Sub-Zero's construction comes as Linn County, where Cedar Rapids is located, has steadily lost manufacturing jobs since the start of the Great Recession in 2007.

The announcement follows a couple hot years in the housing market, as construction has surged since the end of the COVID-19 pandemic recession. But, according to the U.S. Census Bureau, the market is showing signs of cooling, as home construction starts nationally dropped 14% from April to May.

At the same time, inflation is eating into kitchen renovations and upgrades. The cost of a major appliances in May was up 9.4% year over year, according to the U.S. Bureau of Labor Statistics.

A spokesperson for Sub-Zero did not return an email asking whether the economic pressures could delay the Cedar Rapids project, as they have other big projects around the state, including a downtown Des Moines soccer stadium and a beef plant in Tama. 

More:'A strange time': Construction costs delay high-profile developments in Des Moines

Other projects that received state funding from the IEDA in June include:

• Fair Oak Farms, which will open a Davenport bacon factory at the beginning of 2024. The board approved $3.4 million in tax credits. The company promises to hire 247 workers.
• Western's Smokehouse & Meat Market, which will open a Burlington meat stick factory in  May 2023. The board approved $270,000 in tax credits and a $200,000 forgivable loan. The company promises to hire 150 employees.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.